Fitch Cuts Puerto Rico Sewer Bonds To Junk Too

By Michael Aneiro

After being the last of the big three rating agencies to cut Puerto Rico’s credit rating to junk this month, Fitch Ratings is wielding the downgrade stick anew today, cutting $3.4 billion of bonds issued by the Puerto Rico Aqueduct and Sewer Authority, or PRASA, to junk as well. From Fitch:

The credit deterioration and recent downgrade of the commonwealth’s general obligation (GO) rating to ‘BB’ Negative Outlook due to a weak economy and challenges to liquidity and capital markets access pose the same obstacles to PRASA warranting a downgrade to below investment grade. However, PRASA’s improving financial and debt profiles currently keep the authority’s rating from falling further. The Negative Outlook on the authority’s bonds includes possible additional capital and service area pressures that could adversely affect the authority’s financial profile over the long term, particularly in the event further deterioration of the commonwealth’s GO occurs.

Amey Stone is Barron’s Income Investing blogger and Current Yield columnist. She was formerly a managing editor at CBS MoneyWatch, MSN Money and AOL DailyFinance. Her responsibilities included overseeing market coverage and personal finance topics. Prior to those roles, she was a senior writer at BusinessWeek where she authored the Street Wise column online and contributed to the magazine’s Inside Wall Street column. Topics covered included economics, corporate finance, Fed policy, municipal bonds, mutual funds and dividend investing. She co-authored King of Capital, a biography of Citigroup Chairman Sandy Weill. She is a graduate of Yale University and Columbia University’s Graduate School of Journalism.